Q4 2019 Earnings Call
Good afternoon, ladies and gentlemen, and welcome to the anti bone Q4 in full year 2019 earnings conference call. At this time all participants are in listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time, if anyone should require assistance during the conference.
Please press Star then do rely on your Touchtone telephone as a reminder, this conference call is being recorded I wouldn't know love to turn the conference over to host carried amendable Investor relations. Thank you.
Thank you all for participating in today's call joining me today, our Justin President and Chief Executive Officer, and more Frances Chief Financial Officer, and Chief operating officer about high bone.
Earlier today, if I don't really financial results for the quarter and full year ended December 31st 2019.
A copy of the press releases available on the company's website.
Before I begin I'd like to remind you that management will make statements. During this call that include forward looking statements then the meaning of federal Securities laws, which are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
Any statements contained in this call that relate to expectations or predictions of future events results or performance are forward looking statements.
All forward looking statements, including without limitation or examination of operating funds operating trends and our future financial expectations, which includes expectations for hiring I just surgeons new products reimbursement decisions garden for revenue are based upon our current estimates and various assumptions.
These statements involve material risks and uncertainties I could cause actual results or events to materially differ from those anticipated implied by these forward looking statements.
Accordingly, you should not place undue reliance on these statements.
For a list and description the risks and uncertainties associated associated with our business. Please refer to the risk factor section of our most recent quarterly reports on form 10-Q filed with Securities Exchange Commission November 12 2019.
I say bone disclaims any intention or obligation, except as required by law to update or revise any financial projections or forward looking statements are there because of new information future events or otherwise. This conference call contains time sensitive information and is accurate only as of the live broadcast today March nine 2020 with that I'll turn the call of.
Her to Jeff.
Thanks, Gary Good afternoon, and thank you for joining us on.
I'm pleased to welcome yes, I bones earnings call to review, our fourth quarter in full year 2019 results or progress in 2019 was marked by strong commercial execution that drove accelerating revenue growth revenue for the fourth quarter was $19.8 million 27 per cent compared to the fourth quarter two.
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We ended the year was $67.3 million in sales up 22 per cent compared to 2018.
We have now exceeded over 45000 procedures performed by more than 2000 surgeons worldwide.
We are well positioned for the future and continue to expect our revenue for full year 2020 to be in the range of $80 million to $82 million, reflecting 19% to 22% growth over 2019.
As we enter 2020, we expect to progress in investments we've made during 2019 to pay dividends throughout this year, starting with our sales force. We finished the fourth quarter was 56 ramps in or U.S. direct sales organization, almost 56 reps 40 fiber mature reps who are been with.
The company over 12 months.
During 2019 or direct sales reps at an average run rate, probably $1.3 million and for a mature ramps that figure was over $1.6 million.
Our direct reps are further supported by clinical support specialist or see assessors, who assist in case coverage at the end of the fourth quarter. We had 51 see assassins looking ahead to 2020, we're focused on focused on increasing the productivity or bar U.S. salesforce and incrementally hiring both U.S. direct.
Sales reps can see assesses as needed we.
We expect to end the year with around 66 sales reps as we add approximately 10 direct sales reps to large underpenetrated territories over the course it to go 2020.
We also plan to further increase the number CSS is adding an equal number of new specialists throughout the year to support smaller and rapidly growing territories. This will bring or a number of C. S. S is to 61 by the ended 2020.
To support these expansion efforts, we have increased our number of U.S. regions from 10 to 12 by promoting two of our top direct sales were up leaders to regional sales directors.
At the core of our commercial strategy is our focus on driving high fuse procedure borrowing.
Volumes during the fourth quarter or medical affairs fierce team remain focused on training educating and supporting surgeons. We ended the year with 539 active surgeons in the United States, which is defined as the surgery, who has performed at least one procedure in the last three months.
Well, our dream was focused on growing our base of active surgeons. They also were involved in increased utilization within existing active accounts over the course of the year. We saw our average number of cases per U.S. active surgeon increased from 3.3 in the fourth quarter 2018 to three points.
But in the fourth quarter 2019.
2020, we will work to continuing.
Look to continue expanding our base of active surgeons will further penetrating existing accounts, but the only 2020, we expect to increase the number of actor surgeons in the U.S. to 625.
There are three ongoing initiatives, we're implementing their will help us grow our active surgeon base first to train new providers second to reactivate inactive surgeons and finally to continue to grow Kao all support for IPH views. Our vision is that eventually every fourth or where neurosurgeon will include the outside.
During their differential diagnosis of lower back pain. Our goal is for those surgeons to our incorporate I fuse into his or her practice for patients suffering from outside joint dysfunction for degeneration or refer them to on high fuse train surgeon.
Onto reimbursement, we made significant progress throughout 2019, following the publication of the five year follow up resolved Cigna established positive coverage for ammonia aside joint fusion in December 2019.
The new policy specifies the coverage will be exclusive <unk> ft. A clear implants that are placed across the site join in intended to promote bone fusion Cigna is the fourth largest commercial health plan in the United States with 14.6 million members opening a significant opportunity to treat these patients with.
Hi, fuse in December 2019, handsome published a policy update chronic am I guess, if I joined fusion anthem now covers the procedure, but only in the case Talbot girdle drama.
While we do not consider this a full fledge positive coverage policy is the step on the right direction. We will continue to work with anthem ahead of their next review in September.
During the fourth quarter. We also received positive news on the surgeon payment fraud in the final physician payment ran the least on November Onest 2019, CMS increase the CPT codes national average overall surgeon payment by 27% to 915 doors from $720.
The Medicare fee schedule was updated to reflect this new amount effective January onest 2020, many private payers set their payment amounts with reference to the Medicare payment typically 10% to 33% higher than the Medicare payment for procedure, we expect the process of updating commercial payer.
You schedules in physician practice contracts. It takes some time so the full effect of the payment increase may not be felt immediately collectively we expect these reimbursement and payer wins from 2019 to support the expansion of I've used in 2020.
Turning now to our international sales opportunity.
We returned to positive international revenue growth in the second half of the year and ended the fourth quarter with 12% growth following salesforce turnover in 2019, our German team.
Ramp towards greater productivity over the course of the year. We also saw strong growth coming from the UK in our newer branch in France during the fourth quarter.
Additionally, we continue to make progress expanding our portfolio of comprehensive sacred Colbert solution.
Solutions.
In December 2019, we were formally notified of the CE Mark certification in Europe for bedrock with these regulatory reviews complete we launched I've used bedrock in Europe last month similar to our launch in the U.S.. We are focused on gaining support from key opinion leaders academic centers and creating.
Halo effect for our core aside joint fusion business.
We also launched Ifyou bone in the U.S.
In December 2019, I've used bonus and enabling triangular technology for surgeons, who are interested to implant and implanting bone in conjunction with an eye fuse procedure.
We're also working to increase awareness with patients of sacroiliac joint issues as the leading cause of chronic lower back pain or idling costs excuse me.
Survey of a thousand women in 2019 reveal that eight in 10 or are unaware of these issues. After pregnancy on Wednesday February 26, orthopedic surgeon Dr., Michael Moore, Hemi and ESI joint.
Body GMB were featured on the Emmy Award, winning daytime television talk show the doctors. The Doctor show covers a variety of health and medical topics and has an audience of over 1.5 million people watching watching nationwide every day, Jamie and Dr. Mohit discussed how the ifyou.
As procedure enable Jamie to return to an active lifestyle after over a decade proposed pardon pain due to sacroiliac joint dysfunction frustration and misdiagnosis finally before turning the call over to Laura I would like to welcome Jerry Hilleman to our board of Directors service serving.
As a director as well as the chair of our audit committee her extensive experience as a public company CFO provides deep experience across public company leadership capital raises and business development with now with that I will now turn the call over to lower Francis our Chief Financial Officer and.
Chief operating officer to provide more detail on our financial results in our 2020 outlook. Thanks, Jeff.
For the fourth quarter of 2019 revenue increased 27% to $19.8 million compared to $15.6 million in the fourth quarter 2018.
The increase in revenues during the fourth quarter was primarily driven by higher case volumes.
You asked revenue increased 28% to $18.5 million, while international revenue increased 12% to $1.3 million compared to the corresponding prior year period.
Gross margin for the fourth quarter, 2019 was 90% compared to 91% in the fourth quarter 2018.
Operating expenses increased 42% to $26.3 million in the fourth quarter 2019, compared to $18.5 million in the fourth quarter of 2018.
Our operating loss for the fourth quarter, 2019 was $8.5 million compared to $4.3 million in the fourth quarter 2018.
Net loss was 9.1 million dollar brick 36 cents per diluted share for the fourth quarter 2019, as compared to 5.3 million dollar or 26 cents per diluted share in the fourth quarter 2018.
For the full year 2018 revenue increased 22% to $67.3 million.
Fair to $55.4 million in 2018.
US revenue increased 23% to 61.8 million dollar while international revenue increased 4% to $5.9 million compared to 2018.
The increase in U.S. revenue was primarily driven by higher case volumes.
The lower growth rate for international sales was primarily due to softness in our German subsidiary in the first half of the year.
Gross margin for 2019 was 90% compared to 91% in 2018.
The change in gross margin was due to an increase in personnel in operations to support the growth in the business.
This is in line with our expectations for gross margin to trend toward the mid to high 80% range over the next couple of years.
Operating expenses increased 54% to $96.5 million for 2019 compared to $62.5 million in 2018.
The increase in operating expense was primarily driven by increased sales hiring surgeon training new public company costs.
Based compensation and litigation expenses.
Regarding litigation, we executed a definitive settlement agreement in January 2020 to settle all disputes related to the advertising fast case, we mentioned in our third quarter report.
We recognized a loss of $3.2 million in 2019, including $700000 during the fourth quarter, which reflects the optimal cost the company incurred from settlement of the litigation.
The reserve is recorded in our accrued liabilities and we anticipate payment will occur in the third quarter 2020.
The operating loss was $36 million in 2019 compared to $12 million in 2018.
Our net loss was 38.4 million dollar or a loss of $1.55 cents per diluted share for 2019, as compared to $17.5 million or a loss of $2.20 per diluted share in 2018.
Cash and marketable securities were 93.1 million dollar as of December 31st 2018.
In the first quarter of 2025 bone completed a follow on offering raising net proceeds of 63.4 million dollar after deducting the underwriting discounts and commissions.
Turning to our outlook for 2020 as Jeff mentioned, we expect revenue to be in the range of $80 million to $82 million representing growth of 19% to 22% over full year 2019.
We expect us growth to be between 20 and 23% during 2020.
We also expect our international growth in 2020 to continue improving.
Regarding the Corona virus, we are carefully monitoring the situation.
To date, we've seen an impact to our procedures in northern Italy, which represents less than 1% of our sales.
Of course, it's hard to say, how the procedures will be affected if the disease becomes more widespread.
Also we have no suppliers in China and are not experiencing supply issues at this time.
I'll now turn the call back over to Jeff for closing comments.
Thank you Laura 2019 was a transformational year for aside bone, we made significant investments that will add to the continues growth in 2020.
Looking ahead in 2020, we are focused on continued commercial execution in the U.S. and overseas ramping up training and educational efforts and furthering our efforts on the reimbursement front, we are well positioned for growth and look forward to what is ahead I want to thank the aside bone team for their enthusiasm in hardware.
Work, we look forward to updating you on our progress with that we will now open it up to questions operator.
Ladies and gentlemen, if you have a question at this time. Please press the star and then the number one on your Touchtone telephone. If your question has been answered or you've east to remove yourself from the can you. Please press the pound key.
Your first question comes from the line, Dave Turkaly you from JMP Securities. Your line is now open.
Great, Thanks, and congrats on the quarter and other progress.
You made in 19.
I know you mentioned Cigna and anthem on the call I was wondering Jeff if you might just give us an update.
And.
Some of the other payers and where they stand and when do you think you might hear from them.
Yes so.
As I think you know David.
Had posted good.
And did last year at the same time had a date of January nine to post an updated policy last year. They actually were late and posted on March 15.
So our expectation.
And we've heard this sort of indirectly as well.
Is that sometime mid month.
Last month, we should see.
No update.
As to have them, that's still scheduled for the fall and as you know they started to cover some cases under the new policy.
But we don't expect.
Anything to change in a significant wait till the potentially the September timeframe.
And I think as I've mentioned before there's 112 payers that now cover a and there's 12 commercial payers, including the ones. We've just talked about the do not cover. So there is a spattering of others that are still being worked on.
Around the country.
Got it and then no one to 3.3 to 3.7.
Per active surgeon.
Update is great I think it's a little above what we look forward, but I guess just your thoughts on.
Now that you've been at this for a while should we expect that to continue could could that im improve I guess, what your thoughts are sort of as you look at 2020.
Do you think that continues to rise.
Thank you.
Well.
In all the investments we made in 19, whether that's in the salesforce or getting more reimbursement or better payment out there that CMS announced I think you know brings strength to those kinds of numbers as people are interested in doing the procedure.
And more focused on the procedure and I think as they get more educated bill.
And the more patients because if they're not looking carefully they're not finding them.
As to what that number might be David I'm sort of reluctant at this point to throw out a number.
But we obviously see strength of the business.
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We feel very good about 2020 odd despite you know the.
The absolute turmoil that all of us or.
Seeing left and right in front of us with.
No the the oil situation in the Corona by our situation.
We feel very good about the business.
Thank you.
Youre welcome.
Your next question is from the line of David Lewis from Morgan Stanley. Your line is open.
Good afternoon, Jeff just to kind of few clarifying questions here just first on the CPT code increase for physicians as well a signal.
Are you, saying you have not seen an impact from those two dynamics either the two or you are seeing it impacting you would expect that impact to build across the quarters of the year.
The latter day, but we're certainly seeing.
You know an impact in interests and buys from from the both CPT and Cigna I, just saying that it's not.
As contracts have to be rewritten because all the commercial contracts have to get into place. It as you know we have a couple of thousand surgeons that have done the procedure call. It 1400 issue in the United States, all those contracts need to.
On the commercial side or the amended and so I'm just not really sure that all those got done in the first week and so I think the point is that it's going to take some time to do that but I think it's just a general momentum that will come with that.
The year.
Okay. That's a that's such a very clear and then Jeff kind of related to this I think about your physician targeted.
Training growth trends for Twentytwenty, you got it grew.
Physician training by 20% 18, 20% 19, you're forecasting low teens for 20, and I guess just on the surface. When I think about segment I think about now for a significant elevation. The CPT code one would conclude at surgeon training actually would be consistent with the party years, if not even accelerate so help me understand.
And how you're thinking about surgeon training, perhaps you're going to go back and try to reactivate surgeons and that's a specific effort, but I would expect that number to be closer to 20% and 13%.
Stand sort of the commercial strategy for 2020 in light of that number.
David I think this is lora, you're asking a good question here and if you look at what's happened in 2019, we had an interesting.
On a situation where there were two factors that we're driving the growth of our business. So number one was the hiring of all of the sales were up and there was a heavy emphasis on the hiring of the clinical support specialists and what the hiring of all of those clinical.
Support specialist allowed our senior sales reps to do is to actually deeper penetrate their accounts and so what we saw was a.
Momentum with the best Surgeons, who are regularly diagnosing and treating patients which caused the increase from the 3.3 to 3.7, and then and we do attribute that to the addition of all these clinical support specialists that allowed our sales reps to go deeper within there.
Our own account.
The second factor is obviously the training of additional Urgen's and we've put a pretty equal emphasis on both of those the very heavy focus on training surgeons as well is ramping up the salesforce.
And so I think what we're trying to do is be conservative with that surgeon number representing that we may see more of an increase in the number of procedures that are being done in order to make up that 19% to 22% growth or we may see also that increase in the number of surgeons.
Now let me just add David you know as an example, this past weekend, we had three different ESI bone surgeon training slash meetings across the country. One here in San Francisco on Friday, and Saturday and then two in other locations. So.
The demand to even though.
Some of the.
Travel restrictions that are running around out there as you know to do three trainings and one weekend is theirs, because a lot of strength and I think now that the CPT payment as is more interesting, let's just say.
We are continuing to see really good strikes.
Okay sounds like maybe the physician training numbers look conservative, but the focus for 2020 assorted depth of a breath.
I think it's both but certainly we think that there's opportunity I guess it we think this opportunity in both for sure currently our over and meeting with the number that you mentioned the the going deeper into the account.
Okay, and then Jeff slashing I'll jump back into just can you give us an update I know, it's early but just bedrock enrollment trends.
Where where you are in terms of enrollment number or percent of presenter trial enrolled thanks. So much.
We have opened up a.
I don't I don't have the exact number in front of me, David, but but something like I think.
At least a half a dozen sites across the country enrollment is still very early on because those contracts or take time to negotiate but.
Oh, we have very firm targets as to how many people were roll this year and the team is comp based on those enrollments.
To make sure that they get done so.
I think we've shared with you and the rest of a community that we've had 40 academic center.
Trainings and so.
The bedrock cases are being on all over the place.
And the clinical interest 20 sites.
Certainly insights, let's just say this this greater strength that than 20 sites to go into the clinical trial.
Great. Thanks, so much.
Youre welcome.
Thank you next questions from the line of Kyle Rose from Canaccord. Your line is open.
Great. Thank you for taking the questions and congrats on a strong 2019, so I wondered if we could just talk a little bit about the salesforce I appreciate the commentary regarding.
Under our overall productivity and an underlying productivity of the mature reps, but maybe just help us talk about some of the momentum from the later, but the latter cohorts and when you made some big big hiring.
Let them in 2019, you're talking about adding another 10 reps in 2020, how have you seen the productivity curve trend with these latest cohorts.
And then any expectation when you think about guidance this year for disruption and promoting some of your better sales reps to management and explain territories and things of that sort of just help us understand what's contemplated from a productivity standpoint.
Yeah, I'll, let lark comment on some of that but I would start with I don't expect a bear to be any disruption whatsoever from these promotions. These people are very much working managers in the sense, you know that theres a dozen across the country.
Sorry, I think we have a tremendous.
System in place in the field.
With plan reviews.
And we've created a ratio with increasing it to 12, so that the the managers don't have too many reps.
We are very much on track on on the hiring piece, so I don't expect any.
Disruption, there trial and I'll, let lower comment sort of on some of the productivity numbers, though the 1.3 on the 1.6, but.
We feel pretty good about.
The thing actually playing out how we had.
Planned there a with the CSS is and the productivity, but let me turn it over to lower per bit, but believe me. We were looking at those from the beginning we did we did say that we considered a mature ramp to be somebody that had 12 months.
Experienced with us and with our model of of trying to add in clinical support specialists and various other things training that we were doing with our sales or what we're trying to do is really accelerate that.
But what we really found is that it is taking around 12 months.
To really start to ramp up those completely new territories and senior sales routes and so when we place a new senior sales Rep. We estimate that we can get a 100 to $200000 out of them within that first year, but then we see significant growth thereafter, the second year is more in.
The 700000 range the third year more in a $1.4 million ranges is where our models are showing us we're asking what historical data is actually telling us. So we do have to me. The initial investment in order to make that happen, but the good news as we made a substantial investment.
2019, and we think that it puts us into a terrific positions for 2020 to significantly increase our sales and get the productivity out of those people and then to continue to do that with with 10, new territories in 2020.
Great. That's that's very helpful. Thank you.
And then you talked about.
Some new products, new indications I think you Jeff mentioned I fuse bone are there any other new products, we should be thinking about from a launch standpoint in in 2020.
We are working on two major.
Product efforts.
They're very much late this year early next year.
We have have been.
We're very far along in the development I should say a both of those products.
I think they will they will help our efforts not just in the ESI joint space, but in the.
Adult deformity and the trauma space. So there's some cross products that we think are.
Potentially best in breed and and as I think about it Kyle.
When we entered the ESI joint space.
Yeah that really was 50 years of no invention in my mind.
In the lower part of the adult deformity space I think there was pretty modest invention solving that helguvik side of the things in the last 50 years and I think in the trauma space as well over the last 50 years there has been.
But just say modest invention and we think we will advance all three of those areas.
By early next year.
Okay and then just the last question I'll hop back in its just.
When you think about gross margin the gross margin profile the company.
Average selling prices and have you noticed any differences you're going to a broader account base. You've got 800 539 active users now going to go to.
625 in 2020, how should we be thinking about pricing assumptions on a go forward basis.
We we are premium priced product at the present time, our product is on average around 10% to 15% higher than other companies and and so you know and rightly so given the amount to work that we've done in this space the amount of education, we put in.
On the clinical data that we haven't salon.
But with that said, we do look yes, our season and given our strong gross margin profile, we want to make sure to continue to to penetrate the market.
And and grow with it and so on average our asps have been declining by a couple percent to year.
We expect for that to continue to occur over time.
And Thats, what we have built into some of our assumptions and why we give that additional color around gross margin.
Thank you Sir your next question is from the line of Craig Bijou from Cantor Fitzgerald. Your line is open.
Thanks, guys good afternoon.
Thanks for taking the question I wanted to just start with but the guidance in 2000 tone in recognizing that it is still early in there are.
Just from a market perspective, there are couple couple of factors, but.
You know you you sequentially grew throughout 2019, you have a number of pretty good growth drivers coming in 2020 at least in our in our view and the guidance suggests growth that steps down slightly.
Actually it's not a big step down, but just wanted to get your thoughts there is there anything else that we should be considering when when thinking about how your guidance is lined up for 2020.
Yes, Craig.
I think you in the investors on the call noted during 2019 that we were.
Except for this last quarter, the fourth quarter, we were pretty much on the number all through the year.
We are obviously, we're in the fourth quarter ahead of the consensus number.
We we are I think are very confident in the bill or rice and say, we think we are very confident in the business.
But we certainly want to be ahead of the number or going forward. A there is nothing that we see.
A significant headwinds other than this general.
Hello virus issue and.
And so we as you don't exactly know how thats going to play out hopefully they'll all be over in 60 days or at least dissipated in the next 60 days.
You know just as a matter or color on that I.
No we have lost in some cases in Italy, or it's a small portion of our a very small portion of our business.
I just talked to a surgeon.
And then some places they are asking the surgeons not to travel to conferences like at Stanford and why you in a few other places.
Let me.
The first thought I had was well is that a negative or is that a positive that they're going to be home more.
Because they're not going to Brazil to the global spine conference or those kinds of things. So I think that that I would just finish with I think both Lauren I and the rest of the executive team feel very good about the business all the growth drivers all the execution.
We feel and a great place.
On the balance sheet from a balance sheet standpoint than an execution standpoint, we're really not seeing.
To date any effect.
Yes.
From the Corona virus in the US a course that could change but.
But I think.
The guidance is prudent and at the same time, we feel very strong about the business.
Great that's helpful and maybe Laura on.
Obviously 2019 was a significant investment year for you guys.
There's a lot of salespeople and clinical support specialist.
At least on the clinical support specialists side, I don't think you're probably going to add as many.
But just want to understand how we should be thinking about.
Operating leverage and the spend for for 2020.
2019 was very clearly an investment year for the company and there were there were two reasons for reinvestment one was.
Just the amount of momentum that we had from reimbursement.
And then also the capital in order to really capture any opportunity and so what we were doing as we had been very careful about spend in 2018, we havent interesting business, where in 2018, we got to the point of where we were almost breakeven from an operator.
Being income perspective.
Just by very closely managing spend with 90 plus percent gross margins, but then desire to accelerate the growth rate required to sort of investments that we made in 2019 combined with the capital in order to do that so we really put our food on the gas.
In 2019, and you can see how our growth rates have accelerated from that.
Many 20 is a little bit of a different year I would say, it's a year, where we're going to digest a lot of the investments that we actually may. So if you think about for example, those investments that we made in sales reps and clinical support specialists, let's assume that on average.
One of those people came onto our staffing in the middle of the year. So you'll have six months and expense on average from those hires you now need to absorb the full expense in the year 2020. So that's a lot of where you're going to see the increase since then.
And then much more modest investments in other areas of the business. So general administrative expenses shouldn't be growing significantly R&D, we're going to continue to incrementally invest based on the new products that Jeff mentioned as well as the the Sylvia then rock star.
I'd that was mentioned previously those are going to go into R&D, and then sales and marketing as we sat around 10.
Sales reps hired thing plus 10, CSF is hired so some more incremental adding 20 people this year versus 40 last year into the field.
Got it that's a very helpful. Thank you for taking the questions.
Thanks, Craig.
Thank you. Your next question is come from the line of Kaila Krum from Suntrust. Your line is open.
Hey, guys. Thanks for taking our questions on the sale. So you mentioned 2020 is kind of a year to digest some of the investment the of 2019. So I guess, how do you think about sort of 2021 and growth going forward. I mean is it fair to assume that the growth could accelerate off of this 2020 guidance you provided.
I mean, any additional I thought there would be helpful.
Well.
I'll, let all more also share her thoughts but.
No the tail as you know we think were.
We penetrated the market.
Along with the competitors out there less than 10% of the market. So in the base business. We think there's an awful lot of running room for an awful lot of years and with the things that we now have in place.
We think 21 and 22 in that area, we'll continue with great growth.
Particularly of an anthem and INAP not come through prior to 21.
And then I think the second part of that is as we.
For some more products into the into the mix.
In 21, and early 21 or late 20.
Well, we'll see how those uptakes on those products, but.
But we.
We feel quite confident that we've come up with some things that I think will help us and 21 and 22 as a company on top of.
The very underpenetrated still based business. So no of course, adding more sales reps and training more surgeons are part of that equation, but those other fundamental.
Additions around reimbursement and products I think give us great confidence and in the outer years I.
I think the only other thing I'd add to that Kayla is if you look at the.
The average run rate for our direct sales reps right now we're at around 1.3 million.
Productivity per year, and with 56 territories and 51 of them that have clinical support specialists within we feel that.
Target for an average.
Territory is $2 million with the senior sales Rep, plus the clinical support specialists. So theres. This combination of continuing to to higher on the sales cycle, the sales reps and the clinical support specialists, but it's also growing that productivity of the.
Sales reps as well and so it it's that approach and the reason why is to continue we continue to accelerate the growth rate that we've been experiencing number one but then number two overtime.
Having that that vision to profitable growth.
Great that that makes a ton of sense and then you guys mentioned.
I thought in the U.S. The in December can you just talk about sort of how you view that opportunity how meaningful that could be this year, how that sort of increases your average procedure value.
Any additional color would be helpful.
Yeah, I'd make a couple of comments scale. It's it is not a huge.
Introduction, you Didnt see us make some big press release over it you certainly we'll see press releases on these other products that I've alluded too late this year early next year.
The what's behind that is really our strategy around enabling technologies as opposed to a based product.
And and no different than the core to cater where we've we've penetrated a competitor's businesses with that enabling technology.
Bone is the same kind of thing.
It it allows us to go to those surgeons, who say I want to put in bone in conjunction with your product I loved the product, but I really have been talking medical school that putting in bone is a good thing the positive side to that is it's incremental business. The other positive side is that uses the exact same instruments. So we didnt.
I have to spend money on new instruments. It uses the four millimeter implants, which was and it's the same triangular shape. There's certainly business were garnering and and I guess the final item is we expected.
More of those cases to potentially be two implants, and one bone and we are seeing.
Some surgeons actually put in three implants in a bone. So it's early on the play there and it's not a huge part of our business. So I I don't think you should factor that in some important way.
But it isn't incremental strength as we I think have by far the best suite of enabling technologies on top of the best product in the market.
Of competitively.
I think without question. So I think only addition that I wouldn't have it is we were talking about the IP earlier in the discussion when when we think about those technologies that it's partly to ensure that we have all the enabling technologies that are surgeons are looking for to make sure they choose outside.
Bone over.
The other solution that's out there, but it also is a way of helping to to maintain.
The DSP as well.
Thanks, a lot of Sun Thanks, guys.
You're welcome.
Thank you. Your next question comes from the line of David Saxon from Needham Your line is open.
Yeah, Hi, Jeff and Laura Thanks for taking the questions.
In your prepared remarks, you talked a little bit about.
Going out and reactivating inactive surgeons. So I was just wondering how quickly do you think you can do that and how big of an opportunity is that.
Well.
You know the surgeon pie is about 7500, north or neurosurgeons and the United States.
Good Lord you remember works, so 1400 surgeon in the U.S. have been trained and treated at least one patient and 539 surgeons actually performed procedure in the fourth quarter see have.
Around 900, surgeons, who weren't active in that last quarter at the year. So so David it's a good question in the opportunity is pretty significant Glenn.
It is it is difficult to sometimes flip a switch and get them reactivated right away it depends upon what where they're at currently there are some surgeons that are doing multiple procedures a month or other surgeons that are doing procedures. Once a year if you take the.
Surgeons, who are once a year and you get them doing them four times a year. For example, you can relatively quickly.
Increase sales from from those surgeons that are.
Sporadically active if you're taking a surgeon that's been inactive for an extended period of time those are a little bit more challenging. So for example, there may be a surgeon who has significant cigna coverings and was not performing procedures, but decided to start after the cigna decision in.
The fourth quarter, what we would probably need to do is bring that surgeon that train the surgeon and then that surgeon would have to start diagnosing patients and performing procedures, which.
The period of time to do that is is usually a good six to nine months.
So so that's the that's the the the way that we think about inactive surgeons and it's definitely a focal point and could be a very significant growth opportunity for the company. The other another comment I was going to make is there were surgeons that with the previous.
Surgeon payments were not necessarily instructed in performing procedures.
But with that increase of 27% we are hearing from surgeons that they're interested in coming back and performing the procedure as well. So that's another opportunity to get some of those surgeons that have been an active as well as surgeons, who have never been trained or performed a procedure.
Great. That's helpful and then on bedrock.
What kind of revenue assumptions are are baked into guidance and then can you give some color on what percentage of bedrock account.
Go on to do Standalone IP is procedures.
Thanks, so much.
Yeah.
We have we have not a huge amount of bedrock into.
The forecast he is going along.
The when exactly how we had hoped from a exposure standpoint into the academic centers. If someone asked me would we get into 40 academic centers with bedrock I would have said well that's probably a stretch.
And so we're quite pleased with the penetration we haven't as you know and all of you know broken out those particular numbers.
And don't intend to.
Any anytime soon.
So I didn't know if you want to add anything that to that Laura but know that bad luck is doing exactly what we had hoped it would do and that is there is a focus on the EPS I joined to the pain generator coming from key opinion leader and it's helping to drive our core business.
Great. Thanks, so much.
You're welcome.
Thank you I'm showing no further questions at this time I would now like turn the conference back to Mr., Justin President and CEO.
Great.
I guess the thank you very much I know, it's been a challenging day for every one across the world and.
I appreciate you joining the call in and thank you very much for your support.
I have a great evening.
Ladies and gentlemen. This concludes today's conference call. Thank you for your participation and have a wonderful day you may all disconnect.
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